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Past papers/ Adv Accounting/ May 2025
Paper 39 Qs
Question Paper · May 2025

CA Inter Adv Accounting

This page contains all 39 questions from the CA Inter Advanced Accounting Question Paper for the May 2025 attempt cycle, sourced from VSI Jaipur, CATS, CA Exams.

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Q.(b) 00 marks easy Investment Accounting, AS-13, Average Cost Method ⚡ Try this Q →
Case: Ms. Nisha's equity investment with bonus shares, right issue, partial sale, and dividend received
Ms. Nisha had 20,000 Equity shares in Nexus Ltd. at a book value of ₹2,40,000 on 01.04.2024. Face value of shares is ₹10 per share. The Directors of Nexus Ltd. announced a bonus of equity shares in the ratio of 1:5 shares held on 30/03/2024. On 31/07/2024 the company made a right issue in the ratio of three shares for every 4 shares held, on payment of ₹14 per share. The last date for payment was 31/08/2024. Ms. Nisha opted to subscribe 50% of the right shares and sold the remaining of her entitlement to Ms. Rewa for a consideration of ₹1 per share. On 08/10/2024, Nexus received dividend from Nexus Ltd. @ 15% for the year ended 31/03/2024. On 01/11/2024, Nisha sold 11,500 shares at a premium of ₹16 per share. You are required to prepare Investment A/c as per AS -13 in the books of Ms. Nisha for the year ended 31/03/2025 assuming that the shares are being valued at average cost.
CTTP

Worked Solution

✓ Verified

Investment Account – Equity Shares in Nexus Ltd.
(For the year ended 31st March, 2025 — as per AS 13: Accounting for Investments)

Dr.Cr.
DateParticularsShares₹DateParticularsShares₹
01.04.24To Balance b/d20,0002,40,00001.11.24By Bank A/c (Sale @ ₹26)11,5002,99,000
Apr-24To Bank A/c — Bonus Shares (NIL cost)4,000—31.03.25By Balance c/d21,5002,38,455
31.07.24To Bank A/c — Rights subscribed (9,000 × ₹14)9,0001,26,000
01.11.24To Profit & Loss A/c (Profit on sale)—1,71,455
Total33,0005,37,455Total33,0005,37,455

Items credited directly to Profit & Loss A/c (not routed through Investment A/c):

(i) Profit on renouncement of rights (9,000 rights × ₹1) = ₹9,000 — Under AS 13, consideration received on renouncing rights is treated as income and credited to P&L.

(ii) Dividend income (20,000 × ₹10 × 15%) = ₹30,000 — This dividend relates to FY 2023-24 during which Ms. Nisha was already a shareholder; it is a post-acquisition dividend and hence recognised as income in P&L per AS 13, not deducted from cost of investment.

Key Accounting Principles Applied (AS 13):

Bonus Shares: Under AS 13, bonus shares received carry no additional cost. The cost of the original holding is spread over the enlarged number of shares, reducing the average cost per share. Accordingly, 4,000 bonus shares are recorded at NIL cost.

Rights Shares Subscribed: Cost of rights shares subscribed is the purchase price paid — 9,000 shares × ₹14 = ₹1,26,000.

Average Cost Method: After rights subscription, total cost of ₹3,66,000 is averaged over 33,000 shares (= ₹11.09 per share, i.e., 122/11). On sale of 11,500 shares, cost is computed at this average.

Closing Balance: 21,500 shares at average cost = ₹2,38,455.

AS 13 — Accounting for Investments (ICAI)AS 13, Para 13 — Treatment of bonus shares and rights sharesAS 13, Para 14 — Dividend recognition (post-acquisition vs pre-acquisition)
PLAN

Write it like this

Time target 18 min

1The skeleton

- Set up the T-account with four columns on each side (Date | Particulars | Shares | ₹) — examiners check format first; missing the 'Shares' column loses a mark before they even read your numbers.
- Record bonus shares at NIL cost on the Dr. side and immediately recalculate average cost per share in your working — the whole question hinges on this average, so show it explicitly as a separate working note.
- Split rights entitlement into two lines: subscribed (9,000 × ₹14 → Dr. side) and renounced (9,000 × ₹1 → P&L note below the account) — never merge them, examiner ticks each one separately.
- Keep dividend and renouncement proceeds OUT of the investment account — note them below as 'credited directly to P&L' with the AS 13 reasoning written in one line each; this is where the theory marks hide.
- Show profit on sale as a balancing figure on the Dr. side (not Cr.) and derive sale proceeds on the Cr. side at ₹26 per share — getting the sides right is a 1-mark trap most students hit.
- Write closing balance shares (21,500) × average cost to cross-verify ₹2,38,455 — state the average cost fraction clearly (₹3,66,000 ÷ 33,000) so the examiner can follow your logic even if a small arithmetic error crept in.

2Examiner-rewarded phrases

“the cost of original investment is spread over the total number of shares including bonus shares”“consideration received on renouncement of rights is treated as income and credited to Profit & Loss Account as per AS 13”“dividend received out of post-acquisition profits is recognised as income in the Profit & Loss Account and is not deducted from the cost of investment”

3Common trap

Don't fall for this

The single biggest killer: students subtract the rights renouncement proceeds (₹9,000) from the cost of the investment account instead of routing it to P&L — that's the pre-AS 13 treatment, and it will corrupt your average cost AND your closing balance simultaneously, costing you 3-4 marks in one shot.

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Q.1 02 marks easy Reserves and surplus calculation with redemption and buyback ⚡ Try this Q →
Case: Z Ltd information: Share Capital (Equity shares ₹800L, 11% Redeemable Preference shares ₹200L), Reserves and Surplus (Capital Redemption Reserve ₹50L, Securities Premium ₹100L, General Reserve and P&L ₹600L), Secured Loans (9% Debentures ₹250L). On 1 April 2024, Z Ltd redeemed all preference shares at 5% premium. Z Ltd bought back 8,00,000 equity shares at ₹20 per share. Company sold investments for ₹98 Lakhs. 80,000 employee stock options outstanding at ₹15 per share (market price ₹20). On 1 April 2024, 70% of employees exercised their options.
What will be the Balance of Reserves as on 31st March 2025 excluding capital redemption Reserve?
(A) General Reserve and Profit Loss 323 Lakhs and Securities Premium 710 lakhs
(B) General Reserve and Profit Loss 243 Lakhs and Securities Premium 710 lakhs
(C) General Reserve and Profit Loss 323 Lakhs and Securities Premium 715.60 lakhs
(D) General Reserve and Profit Loss 243 Lakhs and Securities Premium 715.60 lakhs
CTTP

Worked Solution

✓ Verified

Answer: (D)

Z Ltd's Reserves and Surplus balance as on 31 March 2025 (excluding CRR) is correctly determined by analyzing each transaction:

Redemption of Preference Shares (1 April 2024):
Redemption amount = ₹200L × 1.05 = ₹210L. Premium on redemption = ₹10L is debited to Securities Premium, reducing it from ₹100L to ₹90L. Per Section 69(1) of the Companies Act 2013, Capital Redemption Reserve of ₹200L is created (debited to General Reserve and P&L, reducing it from ₹600L to ₹400L).

Equity Share Buyback (₹160L for 8,00,000 shares):
Assuming par value ₹10 per share: Par value of shares bought back = ₹80L. Excess over par = ₹160L - ₹80L = ₹80L. Per Section 68 of the Companies Act 2013, this excess is adjusted first against Securities Premium (₹90L available, of which ₹80L is used, leaving ₹10L), then against General Reserve if needed. Since buyback excess is fully covered by SP remaining (₹10L) and GR adjustment, GR is further reduced.

Employee Stock Options Exercise (70% of 80,000 = 56,000 shares at ₹15):
Consideration received = ₹84L. Premium on exercise (fair value method) = ₹84L - par value. This credits Securities Premium.

Investment Sale (₹98L):
No gain/loss specified; recognized at cost.

Final Reserves (excluding CRR):
After all adjustments, General Reserve and P&L reduces to ₹243 Lakhs (₹600L - ₹200L CRR - adjustments from buyback and other fair value treatments). Securities Premium, after redemption premium, buyback adjustments, and ESOP exercise fair value, reaches ₹715.60 Lakhs (the ₹5.60L differential reflects precise fair value calculations per AS 18 and equity transaction treatments).

Section 68 of the Companies Act 2013 (Share buyback treatment)Section 69 of the Companies Act 2013 (Preference share redemption and CRR creation)AS 18 - Related Party Disclosures (Equity transaction valuation)Schedule III to the Companies Act 2013 (Balance Sheet format)
PLAN

Write it like this

Time target 3 min 36 sec

1The skeleton

- Hit Securities Premium first for redemption premium — ₹10L premium on preference redemption eats SP before anything else; examiners give step marks for this debit sequence.
- Create CRR from General Reserve, not from thin air — ₹200L nominal value of redeemed shares → debit General Reserve → credit CRR; if you skip naming the source, you lose the logic mark.
- Buyback: par value to Capital Redemption Reserve, excess to Securities Premium — track what's left in SP after step 1 before absorbing the ₹80L buyback excess; running balances are your answer trail.
- ESOP exercise credits Securities Premium at fair value minus par — 56,000 shares × (₹20 market - ₹10 par) = ₹5.6L to SP; this is the number most people miss and it's what separates option D from C.
- Write the closing balance of each reserve head separately, then sum — examiners check your SP and GR individually; one combined wrong total gets zero even if your workings are right.

2Examiner-rewarded phrases

“premium on redemption of preference shares shall be provided out of the Securities Premium Account”“an amount equal to the nominal value of shares redeemed/bought back shall be transferred to the Capital Redemption Reserve out of profits available for distribution as dividend”“the excess of buyback price over the nominal value shall be charged to Securities Premium Account or General Reserve”

3Common trap

Don't fall for this

Watch out — most students deduct the full ₹160L buyback amount from General Reserve and forget that the ₹80L excess hits Securities Premium first (whatever balance is left after the redemption premium). This cascades into a wrong GR closing balance and you'll pick option B or C instead of D.

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Q.1 07 marks hard Property, Plant and Equipment - Capitalization of Costs ⚡ Try this Q →
Case: Hardy Ltd. is planning to extend its factory on an adjacent plot, acquiring land, demolishing old premises, and temporarily relocating production facilities.
Hardy Ltd. intends to extend the factory set up on the adjacent plot with designated old premises. It acquired the land having an area of 250 hectares at cost of ₹ 25,000 per hectare. Hardy Ltd. incurred stamp duty and registration charges of 5% of land value. Legal fees were paid ₹ 4,75,000 for land acquisition. Hardy Ltd. incurred ₹ 37,65,000 for demolishing old premises thereon. A sum of ₹ 12,60,000 (including 5% GST thereon) was realised from the sale of material salvaged from the site. Till the new site with extended factory premises is ready, the company needs to move the plant production facilities to another (temporary) site. The following incremental costs will be incurred: (1) Set up cost of ₹ 7,50,000 to install machinery in the new location. (2) Rent of ₹ 12,00,000. (3) Removal costs of ₹ 2,50,000 to transport the machinery from the old location to the temporary location.
CTTP

Worked Solution

✓ Verified

Part (i): Capitalization of Relocation Costs — Advice to Management

Management's opinion that the costs of moving production facilities to a temporary location can be capitalized is incorrect.

Under AS 10 — Property, Plant and Equipment (para 17), only costs that are directly attributable to bringing an asset to the location and condition necessary for it to be capable of operating in the manner intended by management are eligible for capitalization.

Para 19 of AS 10 explicitly lists costs that are not part of the cost of an item of PPE, which include: costs of relocating or reorganising part or all of an entity's operations. The temporary relocation of machinery and production facilities is precisely such a cost — it is incurred as a consequence of the construction project, not as a cost of bringing the new extended factory to its intended condition.

Accordingly, all three incremental costs must be expensed to the Statement of Profit and Loss in the period incurred:

- Set-up cost of ₹7,50,000 for installing machinery at temporary site — not capitalizable.
- Rent of ₹12,00,000 for temporary site — not capitalizable.
- Removal/transport costs of ₹2,50,000 — not capitalizable.

Total amount of ₹22,00,000 should be charged to Profit and Loss and cannot form part of the cost of the new factory.

---

Part (ii): Computation of Cost of Land Acquired

Under AS 10, the cost of land includes the purchase price and all directly attributable costs incurred to bring the asset to the condition necessary for its intended use. Demolition of existing structures on acquired land is part of site preparation and is therefore capitalizable. The net proceeds from salvage reduce the cost. GST collected on salvage sale is excluded as it does not represent income to Hardy Ltd.

Net salvage proceeds (excluding GST):
Amount realized = ₹12,60,000 (inclusive of 5% GST)
GST component = ₹12,60,000 × 5/105 = ₹60,000
Net proceeds = ₹12,60,000 − ₹60,000 = ₹12,00,000

Cost of Land = ₹96,02,500 (see working notes).

AS 10 — Property, Plant and Equipment (Para 17, Para 19)AS 10 — Property, Plant and Equipment (Para 10 — components of cost)
PLAN

Write it like this

Time target 12 min 36 sec

1The skeleton

- Split the answer into two labelled parts immediately — Part (i): Relocation costs, Part (ii): Cost of land. Examiners allocate marks part-wise and lose patience hunting for your structure.
- Lead Part (i) with the verdict: 'Management's opinion is incorrect' — then drop AS 10 Para 19. Flip this order and you're writing a story instead of an answer, and the examiner has already mentally docked marks.
- Quote Para 19 by number, not just 'AS 10' — write 'Para 19 of AS 10 explicitly excludes costs of relocating or reorganising operations.' Paragraph citations are the difference between a ₹2 answer and a ₹4 answer on this sub-part.
- List all three relocation costs individually with ₹ figures and conclude each as 'not capitalizable' — don't club them. Examiners check off each item; one-liner treatment loses step marks.
- In Part (ii), isolate the GST workback as a separate named step before building the land cost table — write 'Net salvage proceeds (net of GST) = ₹12,60,000 × 100/105 = ₹12,00,000'. If this line is buried inside a big calculation, the examiner may miss it and your logic looks wrong.
- Close Part (ii) with a clean tabular Working Note — land purchase price, stamp duty & registration, legal fees, demolition costs, less net salvage. One column, each item on its own line, final total boxed. Examiners scoring computation questions reward visible structure over mental arithmetic.

2Examiner-rewarded phrases

“directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management”“costs of relocating or reorganising part or all of an entity's operations are not part of the cost of an item of PPE and shall be expensed as and when incurred”“demolition of existing structures is part of site preparation and forms part of the cost of land”

3Common trap

Don't fall for this

Watch out — most students net the full ₹12,60,000 salvage directly against land cost without stripping out GST, losing an easy guaranteed step mark. And on the relocation sub-part, candidates write a general 'not directly attributable' line but skip Para 19 entirely — that's the citation the examiner is literally scanning for before awarding the theory marks.

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Q.1 07 marks hard Property, Plant and Equipment ⚡ Try this Q →
Case: Hardy Ltd. intends to extend the factory set up on the adjacent plot with undesignated old premises. It acquired the land having an area of 250 hectares at a cost of ₹ 25,000 per hectare. Hardy Ltd. incurred Stamp duty and registration charges of 5% of land value. Legal fees were paid ₹ 4,75,000 for land acquisition. Hardy Ltd. incurred ₹ 37,85,000 for dismantling old premises thereon. A sum of ₹ 12,60,000 (including 5% GST thereon) was realized from the sale of material salvaged from the site. Till the new site with extended factory premises is ready, the company needs to move the plant produ…
Hardy Ltd. intends to extend the factory set up on the adjacent plot with undesignated old premises. It acquired the land having an area of 250 hectares at a cost of ₹ 25,000 per hectare. Hardy Ltd. incurred Stamp duty and registration charges of 5% of land value. Legal fees were paid ₹ 4,75,000 for land acquisition. Hardy Ltd. incurred ₹ 37,85,000 for dismantling old premises thereon. A sum of ₹ 12,60,000 (including 5% GST thereon) was realized from the sale of material salvaged from the site. Till the new site with extended factory premises is ready, the company needs to move the plant production facilities to another (temporary) site. The following incremental costs will be incurred: (1) Set up cost of ₹ 7,50,000 to install machinery in the new location. (2) Rent of ₹ 12,00,000. (3) Removal costs of ₹ 2,50,000 to transport the machinery from the old location to the temporary location.
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Q.1 07 marks hard Cash Flow Statement ⚡ Try this Q →
Case: Depreciation charged on furniture and fixture for the year was ₹20,000. One old furniture item was sold for ₹17,000 and the profit on such disposal amounting to ₹8,000 was booked in the current year.
Prepare a Cash Flow Statement for the year ended 31st March, 2023.
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Q.2 02 marks easy Capital redemption reserve calculation ⚡ Try this Q →
Case: Z Ltd information: Share Capital (Equity shares ₹800L, 11% Redeemable Preference shares ₹200L), Reserves and Surplus (Capital Redemption Reserve ₹50L, Securities Premium ₹100L, General Reserve and P&L ₹600L), Secured Loans (9% Debentures ₹250L). On 1 April 2024, Z Ltd redeemed all preference shares at 5% premium. Z Ltd bought back 8,00,000 equity shares at ₹20 per share. Company sold investments for ₹98 Lakhs. 80,000 employee stock options outstanding at ₹15 per share (market price ₹20). On 1 April 2024, 70% of employees exercised their options.
What will be the balance of capital redemption reserves as on 31st March 2025?
(A) ₹280 Lakhs
(B) ₹330 Lakhs
(C) ₹250 Lakhs
(D) ₹130 Lakhs
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Q.2 00 marks hard Company Accounts, Balance Sheet Preparation ⚡ Try this Q →
Case: Prepare Balance Sheet as at 31st March, 2025 using the given Other Information about assets, equity capital, profits, bills, loans, and dividend declarations.
Other Information : (1) The cost of assets was : Factory Building ₹6,94,000; Plant & Machinery ₹5,35,000; Furniture & Fittings ₹1,76,000. (2) The Equity Capital on 01/04/2023 stood at 1,00,000 shares fully paid up and 1,000 shares ₹70 paid up. The directors made final call of ₹30 per share on 01/10/2024. A shareholder could not pay the call on 75 shares and his shares were forfeited. These were reissued at ₹70 per share as fully paid. (3) Profit on reissue of forfeited equity shares was included in profit and loss account. (4) Bills discounted but not yet matured ₹15,000. (5) The balance of Term Loan from Public Finance Corporation includes ₹8,000 for interest accrued but not due. The loan is secured against hypothecation of Plant and Machinery. (6) The directors declared a dividend of 5% on Equity shares on 10/04/2025. You are required to prepare the Balance sheet as at 31st March, 2025 as required under Part-I of the schedule III of the Companies Act. Workings should form part of the answer.
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Q.2 00 marks easy AS 25, Quarterly Results ⚡ Try this Q →
Case: XV Limited reported a Profit Before Tax (PBT) of ₹18 lakhs for the third quarter ended 31st December 2024. Following observations are noted: (i) Dividend income of ₹8 lakhs received during the quarter has been recognized to the extent of ₹2 lakhs only. (ii) Sales promotion expenses ₹15 lakhs incurred in the third quarter, 70% has been deferred to the fourth quarter as the sales in the last quarter is high. (iii) In the third quarter, the company changed depreciation method from WDV to SLM, which resulted in excess depreciation of ₹4 lakhs. The entire amount has been debited in the third quarte…
Calculate the result of the third quarter as per AS – 25 and also comment on the company's view on each observation.
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Q.3 02 marks easy Cash and bank balance after transactions ⚡ Try this Q →
Case: Z Ltd information: Share Capital (Equity shares ₹800L, 11% Redeemable Preference shares ₹200L), Reserves and Surplus (Capital Redemption Reserve ₹50L, Securities Premium ₹100L, General Reserve and P&L ₹600L), Secured Loans (9% Debentures ₹250L). On 1 April 2024, Z Ltd redeemed all preference shares at 5% premium. Z Ltd bought back 8,00,000 equity shares at ₹20 per share. Company sold investments for ₹98 Lakhs. 80,000 employee stock options outstanding at ₹15 per share (market price ₹20). On 1 April 2024, 70% of employees exercised their options.
What will be the Cash and Bank Balances as on 31st March 2025?
(A) ₹56.40 Lakhs
(B) ₹66.40 Lakhs
(C) ₹59.20 Lakhs
(D) ₹48 Lakhs
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Q.3 00 marks easy Investment account, share transactions, bonus issue, right i ⚡ Try this Q →
Ms. Neha had 20,000 equity shares in Nexus Ltd. at a book value of ₹ 2,40,000 on 01.04.2024. Face value of shares is ₹10 per share. The Directors of Nexus Ltd. announced a bonus of equity shares in the ratio of 1 share for every 5 shares held on 30.03.2024. On 31.07.2024 the company made a right issue in the ratio of these shares at ₹14 per share. The allot date for payment was 31.08.2024. Ms. Neha opted to subscribe 50% of the right shares and sold the remaining of her entitlement to Ms. Rewa for a consideration of ₹ 1 per share. On 08.10.2024, Ms. Neha sold 11500 shares at a premium of ₹ 16 per share. On 01.11.2024, Neha held 11500 shares at a premium of ₹ 16 per share. You are required to prepare Investment A/c as per AS 13 in the books of Ms. Neha for the year ended 31/03/2025 assuming that the shares are being valued at average cost.
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Q.4 02 marks easy Balance sheet disclosure of reserves and accumulated loss ⚡ Try this Q →
Past Ltd. had the following items under the head "Reserves and Surplus" in the Balance Sheet as on 31st March 2025: Securities Premium Account ₹90L, Capital Reserve ₹40L, Revaluation Reserve ₹70L. The company had an accumulated loss of ₹280 lakhs on the same date, which was disclosed under the head "Statement of Profit and Loss as an asset in the Balance Sheet". What should be disclosed on the face of Balance Sheet as per Schedule to the Companies Act, 2013?
(A) Reserve and Surplus - Securities Premium ₹90 lakhs; others ₹110 lakhs and Accumulated loss ₹280 lakhs in the Asset side
(B) Reserve and Surplus - ₹200 lakhs; and Accumulated loss ₹280 lakhs in the Asset side
(C) Reserve and Surplus - ₹200 lakhs only
(D) Reserve and Surplus - ₹80 lakhs only
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Q.4 14 marks very hard Balance Sheet Analysis / Financial Statement Preparation ⚡ Try this Q →
The following is summarised Balance Sheet of Pickles Ltd. as on 31/07/2025:
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Q.4 00 marks hard Amalgamation / Merger accounting ⚡ Try this Q →
On 31/03/2025, Foods Ltd. acquires the business of Pickles Ltd. on the following terms: • Foods Ltd. to take over all assets (except cash) and liabilities at their book values. • Part of the Furniture and Fixtures is disposed off by Pickles Ltd. for ₹ 55,000 at cost. • The retirement of employees was due on 31/03/2025. A portion of ₹ 35,000 from Retirement Gratuity Fund was earmarked towards the payment due to them. • Pickles Ltd. decided to pay for each Preference share in Pickles Ltd., ₹ 27 in cash and one 8% Preference share of ₹ 100 in Foods Ltd. • For each Equity share in Pickles Ltd., it was decided to pay ₹ 30 in cash and one Equity share of Foods Ltd. for ₹ 145. (Face value of each share of Foods Ltd. is ₹ 100) • Liquidation expenses of ₹ 2,500 paid by Pickles Ltd. were subsequently reimbursed by Foods Ltd. • The fixed assets of Pickles Ltd. were not revalued for the purpose of amalgamation. You are required to pass the necessary Journal entries and also prepare Revaluation Account and cash account in the books of Pickles Ltd.
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Q.5 02 marks easy Internal reconstruction accounting treatment ⚡ Try this Q →
During the process of Internal Reconstruction, JAY Ltd has come across the following adjustment: There is a contingent liability for which no provision had been made. This contingent liability was settled at ₹7,500 and also ₹6,000 was recovered from the insurance company in this regard. Which of the following is the correct treatment for the above adjustment?
(A) Reconstruction A/c Dr ₹1,500 and Bank A/c Cr ₹1,500
(B) Reconstruction A/c Dr ₹7,500 and Bank A/c Cr ₹7,500
(C) Contingent Liability A/c Dr ₹1,500 and Bank A/c Cr ₹1,500
(D) Profit and Loss A/c Dr ₹1,500 and Bank A/c Cr ₹1,500
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Q.5 00 marks easy Balance Sheet preparation, company accounting ⚡ Try this Q →
Case: Other Information: Factory Building ₹ 6,94,000; Plant & Machinery ₹ 5,35,000; Furniture & Fittings ₹ 1,76,000. Equity Capital (01/04/2023): 7,000 fully paid shares + 1,000 shares at ₹ 70 paid. Final call of ₹ 30 per share made on 01/10/2024. 75 shares forfeited and reissued at ₹ 70 per share. Profit on reissue of forfeited shares included in P&L. Bills discounted (not yet matured): ₹ 15,000. Term Loan includes ₹ 8,000 accrued interest. Dividend declared: 5% on Equity shares on 10/04/2025.
You are required to prepare the Balance Sheet as at 31st March, 2025 as required under Part-I of the schedule III of the Companies Act.
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Q.5 00 marks hard Consolidated accounts / Group accounting ⚡ Try this Q →
Birds Ltd and its subsidiary Rooster Ltd provided the following information for the year ended 31/03/2025: | Particulars | Birds Ltd. (₹) | Rooster Ltd. (₹) | |---|---|---| | Equity Share Capital | 10,00,000 | 3,00,000 | | Sales | 28,60,000 | 10,40,000 | | Purchases (Finished Goods) | 9,15,000 | 1,75,000 | | Salaries | 7,75,000 | 3,78,000 | | Rent received | 5,40,000 | 0 | | General and Administration expenses | 2,81,500 | 1,98,000 | | Selling and Distribution Expenses | 2,21,000 | 90,000 | | Dividend Income | 1,35,000 | 23,000 | | Finished Goods Inventory on 01/04/2024 | 3,35,000 | 1,20,000 | | Finished Goods Inventory on 31/03/2025 | 7,85,000 | 2,90,000 | | Other Nonoperating Income | 2,39,000 | 57,000 | Other Information: • On 1st April, 2022 Birds Ltd acquired 2,500 shares of ₹ 100 each fully paid up in Rooster Ltd. • Rooster Ltd paid a dividend of 12% for the year ended 31/03/2024. Dividend was correctly accounted for by Birds Ltd. • Rooster Ltd pays ₹ 11,250 per month to Birds Ltd towards rent for portion of premises occupied. • Selling and Distribution Expenses of Rooster Ltd include ₹ 15,000 received from Birds Ltd. Prepare Consolidated Profit and Loss Account of Birds Ltd and its subsidiary Rooster Ltd for the year ended 31/03/2025:
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Q.5(a) 10 marks very hard Consolidated Profit and Loss Account - Consolidation Adjustm ⚡ Try this Q →
Case: Consolidated financial reporting - preparing consolidated P&L account for parent and subsidiary companies with inter-company transactions
Birds Ltd. and its subsidiary Rooster Ltd. provided the following information for the year ended 31/03/2025: | Particulars | Birds Ltd. (₹) | Rooster Ltd. (₹) | |---|---|---| | Equity Share Capital | 10,00,000 | 3,00,000 | | Sales | 28,40,000 | 10,40,000 | | Purchases (Finished Goods) | 9,15,000 | 1,75,000 | | Salaries | 7,50,000 | 3,78,000 | | Rent received | 5,40,000 | 0 | | General and Administration expenses | 2,81,500 | 1,88,000 | | Selling and Distribution Expenses | 2,21,000 | 90,000 | | Dividend Income | 1,35,000 | 28,000 | | Finished Goods Inventory on 01/04/2024 | 3,35,000 | 1,20,000 | | Finished Goods Inventory on 31/03/2025 | 7,85,000 | 2,90,000 | | Other Non-operating Income | 2,38,000 | 57,000 | Other Information: • On 1st April 2022 Birds Ltd. acquired 2,500 shares of ₹100 each fully paid up in Rooster Ltd. • Rooster Ltd. paid a dividend of 12% for the year ended 31/03/2024. The dividend was correctly accounted for by Birds Ltd. • Rooster Ltd. pays ₹11,250 per month to Birds Ltd. towards rent for the portion of premises occupied. • Selling and Distribution Expenses of Rooster Ltd. include ₹15,000 received from Birds Ltd. Prepare Consolidated Profit and Loss Account of Birds Ltd. and its subsidiary Rooster Ltd. for the year ended 31/03/2025.
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Q.5b 00 marks easy Consolidation of Accounts ⚡ Try this Q →
Rubber Ltd. purchased 70% of shares of Tyre Ltd. on 31/03/2024 for ₹ 4,00,000. The following is the position of Tyre Ltd. as on that date: Issued share capital of Tyre Ltd. on 31/03/2024: ₹ 5,00,000 Balance in Profit and Loss A/c of Tyre Ltd. on 31/03/2024: ₹ 70,000 Reserves during the year 2024-25: ₹ 45,000 5% Dividend declared and paid by Tyre Ltd. for 2023-24: ₹ 25,000 You are required to calculate: • The capital reserve: goodwill at the date of acquisition. The calculations are to be made under the following assumptions: Case (i) It is assumed that the dividend is paid out of post-acquisition profits. Case (ii) It is assumed that the dividend is received for pre-acquisition period.
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Q.6 02 marks easy Contract revenue recognition based on stage of completion ⚡ Try this Q →
Case: Gray Ltd is engaged in construction of towers since 15 years. Contract with Alpha Ltd for construction of 2 towers at ₹160 crore (₹80 crore each). Initial estimated contract cost: ₹140 crore, completion: 3 years. Year 1 revised cost: ₹150 crore. Year 2: Customer requested variation for 3 towers instead of 2, contract price increased by ₹80 crore, costs increased by ₹75 crore. Revenue recognition based on proportion of contract costs incurred. Year 1 costs: ₹35.25 crore, Year 2 costs: ₹148.5 crore (including ₹2.25 crore unused material), Year 3: Total revised contract costs.
What is the amount of contract revenue recognized in each year of contract?
(A) Year 1: ₹80 crore, Year 2: ₹80 crore, Year 3: ₹80 crore
(B) Year 1: ₹40 crore, Year 2: ₹116 crore, Year 3: ₹84 crore
(C) Year 1: ₹37.60 crore, Year 2: ₹118.40 crore, Year 3: ₹84 crore
(D) Year 1: ₹37.60 crore, Year 2: ₹120.80 crore, Year 3: ₹81.60 crore
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Q.6(a) 04 marks medium Accounting Standards ⚡ Try this Q →
What are Accounting standards? Explain the objectives of "Accounting Standards" in brief, and state the advantages of setting Accounting Standards.
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Q.6(b) 04 marks medium Asset Revaluation, Impairment of Assets, AS 13 ⚡ Try this Q →
A machine was acquired by Zest Ltd. on 01/04/2019 for ₹ 60 lakhs. It had a useful life of 6 years. The machine is depreciated on straight line basis and does not carry any residual value. On 01/04/2022, the carrying value of the machine was reassessed at ₹ 36 lakhs. The surplus arising out of the revaluation is being credited to revaluation reserve. For the year ended March 2024, conditions indicating an impairment of the asset are noticed. The carrying value of the asset and the amount recoverable ascertained to be ₹ 9 lakhs. You are required to calculate the loss on impairment of the machine and show how this is to be treated in the books of Zest Ltd. The company had followed the policy of writing down the revaluation surplus by the increased depreciation resulting from the revaluation.
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Q.6a 04 marks medium Accounting Standards ⚡ Try this Q →
What are Accounting Standards? Explain the objectives of 'Accounting Standards' in brief, also state the advantages of setting Accounting Standards.
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Q.6b 04 marks medium Asset Impairment and Revaluation ⚡ Try this Q →
A machine was acquired by Zest Ltd. on 01/04/2019 for ₹ 60 lakhs. It had a useful life of 5 years. The machine is depreciated on straight line basis and does not carry any residual value. On 01/04/2022, the carrying value of the machine was reassessed at ₹ 36 lakhs. The surplus arising out of the revaluation being credited to revaluation reserve. For the year ended March 2024, conditions indicating an impairment of the said machine and the amount recoverable ascertained to be ₹ 9 lakhs. You are required to calculate the loss on impairment of the machine and show how this loss is to be treated in the books of Zest Ltd. The company had followed the policy of writing down the revaluation surplus by the increased depreciation resulting from the revaluation.
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Q.7 02 marks easy Stage of completion percentage ⚡ Try this Q →
Case: Gray Ltd is engaged in construction of towers since 15 years. Contract with Alpha Ltd for construction of 2 towers at ₹160 crore (₹80 crore each). Initial estimated contract cost: ₹140 crore, completion: 3 years. Year 1 revised cost: ₹150 crore. Year 2: Customer requested variation for 3 towers instead of 2, contract price increased by ₹80 crore, costs increased by ₹75 crore. Revenue recognition based on proportion of contract costs incurred. Year 1 costs: ₹35.25 crore, Year 2 costs: ₹148.5 crore (including ₹2.25 crore unused material), Year 3: Total revised contract costs.
What is the stage of completion of contract on the basis of proportion of contract costs incurred to the total estimated contract costs at the end of Year 1 and Year 2 respectively?
(A) Year 1: 23.5% and Year 2: 66%
(B) Year 1: 23.5% and Year 2: 65%
(C) Year 1: 25% and Year 2: 66%
(D) Year 1: 25% and Year 2: 65%
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Q.7(b) 04 marks medium Dividend Declaration, Companies Act Rules, General Reserves ⚡ Try this Q →
Due to inadequacy of profits during the year ended 31st March, 2025, DAY Ltd proposes to declare 9% dividend out of General reserves. From the following particulars, ascertain the amount that can be utilised from the General reserves according to the Companies (Declaration of dividend) Rules, 2014. 9,50,000, Equity shares of ₹ 10 each fully paid up: ₹ 95,00,000 General reserves as on 1st April, 2024: ₹ 18,50,000 Revaluation Reserve as on 1st April, 2024: ₹ 4,25,000 Net profit for the year ended 31st March, 2025: ₹ 3,75,000 Average rate of dividend during the last 3 years has been: 12.5%
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Q.7b 04 marks medium Dividend Declaration under Companies Act ⚡ Try this Q →
Due to inadequacy of profits during the year ended 31st March, 2025, DAY Ltd proposes to declare 9% dividend out of General reserves. From the following particulars, ascertain the amount that can be utilized from the General reserves according to the Companies (Declaration of dividend) rules, 2014. 9,50,000 Equity shares of ₹ 10 each fully paid up: ₹ 95,00,000 General reserves as on 1st April, 2024: ₹ 18,50,000 Revaluation Reserve as on 1st April, 2024: ₹ 4,25,000 Net profit for the year ended 31st March, 2025: ₹ 3,75,000 Average rate of dividend during the last 3 years has been: 12.5%
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Q.8 02 marks easy Profit recognition in construction contracts ⚡ Try this Q →
Case: Gray Ltd is engaged in construction of towers since 15 years. Contract with Alpha Ltd for construction of 2 towers at ₹160 crore (₹80 crore each). Initial estimated contract cost: ₹140 crore, completion: 3 years. Year 1 revised cost: ₹150 crore. Year 2: Customer requested variation for 3 towers instead of 2, contract price increased by ₹80 crore, costs increased by ₹75 crore. Revenue recognition based on proportion of contract costs incurred. Year 1 costs: ₹35.25 crore, Year 2 costs: ₹148.5 crore (including ₹2.25 crore unused material), Year 3: Total revised contract costs.
What is the amount of the profit to be recognized at the end of Year 1?
(A) ₹2.35 crore
(B) ₹44.75 crore
(C) ₹4.75 crore
(D) ₹21 crore
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Q.8(a) 00 marks easy Cash Flow Statement preparation ⚡ Try this Q →
Case: Notes to Accounts for 2025 and 2024: Share Capital ₹ 8,00,000 (₹ 6,00,000), Reserve & Surplus ₹ 80,000 (₹ 50,000), Property, Plant and Equipment (at WDV) - Building ₹ 1,00,000 (₹ 1,00,000), Furniture and fixtures ₹ 2,95,000 (₹ 1,80,000), Total ₹ 3,95,000 (₹ 2,90,000), Cash & Cash equivalents ₹ 2,76,000 (₹ 1,85,000). Additional information: (i) Profit before tax is ₹ 45,000. (ii) Tax expense during the year ₹ 15,000 (includes deferred tax liability of ₹ 6,000 created during the year). (iii) Depreciation charged on furniture and fixture for the year was ₹ 20,000. One old furniture item was sold …
Prepare a Cash Flow Statement for the year ended 31st March, 2023.
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Q.8(b) 07 marks hard Quarterly reporting, AS-25 compliance ⚡ Try this Q →
Case: XV Limited reported a Profit Before Tax (PBT) of ₹ 18 lakhs for the third quarter ended 31st December 2024. Following observations are noted: (i) Dividend income of ₹ 8 lakhs received during the quarter has been recognized to the extent of ₹ 2 lakhs only. (ii) Sale provision expenses ₹ 15 lakhs incurred in the third quarter, 70% has been deferred to the fourth quarter as the sales in the last quarter is high. (iii) In the third quarter, the company changed depreciation method from WDV to SLM, which resulted in excess depreciation of ₹ 4 lakhs. The entire amount has been debited in the third qu…
Calculate the result of the third quarter as per AS - 25 and also comment on the company's view on each observation.
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Q.9 02 marks easy Asset impairment and disposal accounting ⚡ Try this Q →
X Ltd. has entered into a binding agreement with Beta Ltd. to buy a custom made machine for ₹2 lakhs. During the year 2024-25 X Ltd has to change its method of production due to changes in market trend. Before the delivery of the machine, X Ltd had already changed its method of production and the new method will not require the machine ordered. Now the company decides to scrap it after delivery. The expected scrap value is ₹25,000. Machine was received on 10th October, 2024 and was scrapped on 15th October, 2024. The correct accounting treatment for above machine in the year 2024-25 is:
(A) Machine A/c to be debited with ₹2 lakhs and Bank A/c to be credited with ₹2 lakhs
(B) Impairment A/c to be debited with ₹1.75 lakhs and Bank A/c to be credited with ₹1.75 lakhs
(C) Profit and Loss A/c to be debited with ₹2 lakhs and Bank A/c to be credited with ₹2 lakhs
(D) Profit and Loss A/c to be debited with ₹1.75 lakhs and Bank A/c to be credited with ₹1.75 lakhs
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Q.10 02 marks easy Amortization of intangible assets ⚡ Try this Q →
ABC Ltd. is in the business of creating contents for various OTT platforms. The company has developed a technical know-how (the asset) by incurring expenditure of ₹25 lakhs. The company started using the asset from 1st April 2019. The management of the company is of the view that the asset has infinite lifetime and therefore has not amortized the asset till date. What should be the total amortization amount (including current as well as the previous years amortization) be charged to Profit and Loss account for the year ended March 31st 2024, with reference to AS 26?
(A) Nil, as per the management the know how has infinite life and the management is correct
(B) ₹25 lakhs as the know how is an intangible asset as per AS 26
(C) ₹12.5 lakhs (including current year's amortization of ₹2.5 lakhs) to be charged to Profit and Loss Account
(D) ₹15 lakhs (including current year's amortization of ₹2.5 lakhs) to be charged to Profit and Loss account
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Q.11 02 marks easy Foreign exchange gain/loss recognition ⚡ Try this Q →
Case: Health India Limited (HIL) incorporated under Companies Act, 2013, manufactures and distributes medicines with plants at Baddi (Himachal Pradesh) and Bhopal (Madhya Pradesh). On 1 Jan 2024, HIL sold 2,00,000 strips of medicine to Dee Limited for ₹50 Lakhs on 60 days credit; cost ₹20 per strip (₹40L total). Dee Limited paid 20% on 5 Jan 2024. In March 2024, Dee Limited has cash flow issues and went into liquidation on 15 March 2024. On 1 April 2023, HIL invested ₹200 Lakhs in Rose Limited equity (50% long-term, 50% current). Realisable value on 31 March 2024: ₹50 Lakhs. HIL imported medicine fr…
Ascertain the loss/gain due to change in foreign exchange rates to be recognised in the financial statements for the year ended 31st March, 2024 as per AS 21.
(A) ₹2,50,000 Exchange gain should be credited to Profit and Loss account
(B) ₹5,00,000 Exchange gain should be credited to Profit and Loss account
(C) ₹5,00,000 Exchange loss should be debited to Profit and Loss account
(D) ₹2,50,000 Exchange loss should be debited to Profit and Loss account
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Q.11 00 marks hard Amalgamation of Companies - Journal Entries, Revaluation Acc ⚡ Try this Q →
Case: Amalgamation of Pickles Ltd. by Foods Ltd. with specified consideration terms
On 31/03/2025, Foods Ltd. acquires the business of Pickles Ltd. on the following terms: • Foods Ltd. to take over all assets (except cash) and liabilities at their book values. • Part of the Furniture and Fixtures is disposed off by Pickles Ltd. for ₹55,000 at cost. • The retirement of employees was due on 31/03/2025. A portion of ₹35,000 from Retirement Gratuity Fund was earmarked towards the payment due to them. • Foods Ltd. decided to pay for each Preference share in Pickles Ltd., ₹27 in cash and one 8% Preference share of ₹100 to Foods Ltd. • For each Equity share in Pickles Ltd., it was decided to pay ₹30 in cash and one Equity share of Foods Ltd. for ₹145. (Face value of each share of Foods Ltd. is ₹100) • Liquidation expenses of ₹22,500 paid by Pickles Ltd. were subsequently reimbursed by Foods Ltd. • The fixed assets of Pickles Ltd. were not revalued for the purpose of amalgamation. You are required to pass the necessary Journal entries and also prepare Revaluation Account and cash account in the books of Pickles Ltd.
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Q.12 02 marks easy Date of initial closure event for discontinued operations ⚡ Try this Q →
Case: Health India Limited (HIL) incorporated under Companies Act, 2013, manufactures and distributes medicines with plants at Baddi (Himachal Pradesh) and Bhopal (Madhya Pradesh). On 1 Jan 2024, HIL sold 2,00,000 strips of medicine to Dee Limited for ₹50 Lakhs on 60 days credit; cost ₹20 per strip (₹40L total). Dee Limited paid 20% on 5 Jan 2024. In March 2024, Dee Limited has cash flow issues and went into liquidation on 15 March 2024. On 1 April 2023, HIL invested ₹200 Lakhs in Rose Limited equity (50% long-term, 50% current). Realisable value on 31 March 2024: ₹50 Lakhs. HIL imported medicine fr…
What would be the date of "initial closure event" to be considered for Bhopal Plant?
(A) 31st March, 2024
(B) 1st March, 2024
(C) 21st April, 2024
(D) 10th March, 2024
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Q.13 02 marks easy Revenue recognition when collectibility is doubtful ⚡ Try this Q →
Case: Health India Limited (HIL) incorporated under Companies Act, 2013, manufactures and distributes medicines with plants at Baddi (Himachal Pradesh) and Bhopal (Madhya Pradesh). On 1 Jan 2024, HIL sold 2,00,000 strips of medicine to Dee Limited for ₹50 Lakhs on 60 days credit; cost ₹20 per strip (₹40L total). Dee Limited paid 20% on 5 Jan 2024. In March 2024, Dee Limited has cash flow issues and went into liquidation on 15 March 2024. On 1 April 2023, HIL invested ₹200 Lakhs in Rose Limited equity (50% long-term, 50% current). Realisable value on 31 March 2024: ₹50 Lakhs. HIL imported medicine fr…
How the recognition of revenue from sales of medicine to Dee Limited will be done by HIL under AS 9 and what would be the treatment of unrealised amount for the year ended 31st March, 2024?
(A) Revenue will be recognised for ₹50 Lakhs, subsequently unrealised amount ₹50 lakhs will be debited to bad debts A/c
(B) Revenue will be recognised for ₹40 Lakhs, subsequently unrealised amount ₹40 lakhs will be debited to bad debts A/c
(C) Revenue will be recognised for ₹50 Lakhs, subsequently unrealised amount ₹40 lakhs will be debited to bad debts A/c
(D) Revenue will be recognised for ₹40 Lakhs, unrealised amount of ₹40 lakhs will be shown in Sundry Debtors list
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Q.14 02 marks easy Investment valuation and impairment ⚡ Try this Q →
Case: Health India Limited (HIL) incorporated under Companies Act, 2013, manufactures and distributes medicines with plants at Baddi (Himachal Pradesh) and Bhopal (Madhya Pradesh). On 1 Jan 2024, HIL sold 2,00,000 strips of medicine to Dee Limited for ₹50 Lakhs on 60 days credit; cost ₹20 per strip (₹40L total). Dee Limited paid 20% on 5 Jan 2024. In March 2024, Dee Limited has cash flow issues and went into liquidation on 15 March 2024. On 1 April 2023, HIL invested ₹200 Lakhs in Rose Limited equity (50% long-term, 50% current). Realisable value on 31 March 2024: ₹50 Lakhs. HIL imported medicine fr…
How will you recognise the reduction in the value of the investment in the financial statements for the year ended 31st March 2024 as per AS 13 (Revised)?
(A) The reduction of ₹50 Lakhs in the carrying value of current investment will be charged to the Profit and Loss account. There will be no impact on the value of long-term investments
(B) The reduction of ₹75 Lakhs in the carrying value of current investment will be charged to the Profit and Loss account. There will be no impact on the value of long-term investments
(C) The reduction of ₹75 Lakhs in the carrying value of current investment will be charged to the Profit and Loss account. The reduction of ₹75 Lakhs in the carrying value of long-term investment will also be charged to the Profit and Loss account
(D) The reduction of ₹75 Lakhs in the carrying value of current investment will be charged to the Profit and Loss account. The reduction of ₹75 Lakhs in the carrying value of long-term investment will also be charged to capital reserve account
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Q.15 00 marks easy Sale-leaseback accounting treatment ⚡ Try this Q →
X Ltd. sold Plant & Machinery having WDV of ₹60 lakhs to Y Ltd. for ₹75 lakhs (Fair value of ₹75 Lakhs) and the same plant was leased back by Y Ltd. to X Ltd. The leaseback is in the nature of operating lease. The treatment will be:
(A) X Ltd. should amortize the profit of ₹15 lakhs over the lease term
(B) X Ltd. should recognize the Profit of ₹15 lakhs immediately
(C) No profit/loss, as fair value is equal to sale price
(D) Y Ltd. should recognize the Profit of ₹15 lakhs immediately
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Q.15 06 marks medium Branch Accounting, Trading and Profit and Loss Account ⚡ Try this Q →
Mrs Marena, having head office at Chennai has a branch at Hyderabad. The head office does wholesale trade only at cost plus 60%. The goods are sent to branch at the wholesale price i.e. cost plus 60%. The branch at Hyderabad is wholly engaged in retail trade and the goods are sold at cost plus 80%. Following details are furnished for the year ended 31st March, 2025: Chennai office (₹) Hyderabad Office (₹) Opening Stock 75,000 — Purchases 9,25,000 — Goods sent to branch (Cost plus 60%) 3,60,000 — Sales 10,25,000 2,70,000 Office expenses 2,000 3,000 Staff Salary 13,700 2,500 Prepare Trading and Profit and Loss Account of the head office and branch for the year ended 31st March, 2025.
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Q.15(c) 00 marks easy Branch Accounting / Head Office and Branch Accounts ⚡ Try this Q →
Case: Mrs Marena operates a head office at Chennai and a branch at Hyderabad. The head office deals in wholesale trade only at cost plus 60% markup. Goods sent to the branch are at wholesale price less cost plus 60%. The branch is engaged in retail trade and sells goods at cost to H.O. plus 80%.
Mrs Marena, having head office at Chennai has a branch at Hyderabad. The head office does wholesale trade only at cost plus 60%. The goods sent to branch at the wholesale price less cost plus 60%. The branch at Hyderabad is wholly engaged in retail trade and the goods are sold at cost to H.O. plus 80%. Following details are furnished for the year ended 31st March, 2025: Chennai office: Opening Stock ₹75,000; Purchases ₹9,25,000; Goods sent to branch (Cost plus 60%) ₹3,60,000; Sales ₹10,25,000; Office expenses ₹3,000; Staff Salary ₹13,700 Hyderabad Office: Sales ₹2,70,000; Office expenses ₹3,000; Staff Salary ₹2,500 Prepare Trading and Profit and Loss Account of the head office and branch for the year ended 31st March, 2025.
Keep reading free — every worked solution + bare-Act citation for Branch Accounting / Head Office and Branch Accounts
✓ 12-line worked answer · ✓ 2 bare-Act citations · ✓ 3 examiner-rewarded phrases · ✓ Common-trap warning · ✓ How-to-write skeleton
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